Foreign banks have spent billions on buying up Mexican banks, leaving just one major institution in local hands. The foreign banks are attracted by Mexico's strong economic potential and its membership in Nafta. The inflow of foreign capital has bolstered the banking system's balance sheet, giving banks access to lower-cost funding that should translate into cheaper and more plentiful loans for a country desperately in need of credit. So far that hasn't happened. Assets and profits are rising, but lending remains flat.
HSBC Holdings of the UK is the most recent entrant to the Mexican market. In August, HSBC bought Grupo Financiero Bital, the country's fourth-largest bank, for $1.14 bill